All About CDFI from LISC CEO Maurice Jones > IMPACT INVESTING

Read all about it—or at least part of it—in a wide-ranging interview with Next Street, wherein Maurice Jones talks about new avenues for partnership and funding, balancing our interests in housing and business, and whether or not CDFIs are too much like banks.
< Take a look at the infographic to the left
WHAT IS IMPACT INVESTING?
. . . to generate positive social or environmental impact
Why does this matter along with expecting financial returns?
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Next Street: There is a perception that CDFIs have become too bank-like to fulfill their mission to provide capital and resources to underserved communities. Do you agree?

Maurice Jones: There’s no question that CDFIs need to continue to push deeper into our communities and take more risk – smart risk – but more risk. Frankly, we need to demonstrate that we can invest in small businesses, entrepreneurship, commercial corridors – and we do that by mitigating risk, and finding good partners to work with. We need to help transform people and neighborhoods.
NS: And to what extent do you think the ability to take more risk is driven by your current funding sources?

MJ: I definitely think we need to continue to expand and diversify our funding sources, as they contribute to this. But at the end of the day it’s our job to present the compelling business case to our partners (including our funding sources) for why we need more long-term capital, why we need to take more chances in the communities we’re serving, and how to do it more prudently to mitigate risk. At the end of the day, I put it back on us. We need to present the compelling case to get our partners to go on this journey.
Let me add on to that: Before going to access the capital markets, our significant motivation was to get funding with fewer restrictions – both geographic restrictions and term restrictions (long-term versus short term) – so we could do more work in rural America, so we could do more work on economic development, and so on. I want to be clear that we can’t take the funding sources out of the game.
NS: Do you believe that by changing the types of capital used to fund your activities, you would be able to take more smart risk in terms of lending to entrepreneurs?

MJ: It’s a combination of us continuing to search for new sources of capital, while also continuing to make the case to funders that this is where we truly need to be if we want to have transformative impact. And third, we need to believe the gospel – we need to push our organizations to find more minority-owned businesses, more women-owned businesses, and other underrepresented groups. The above are strategies that we need to pursue, but it starts with us aspiring to make an impact in these spaces. It starts with us paying just as much attention to investing with enterprises as we do with real estate. And that’s on us; that’s where we have to lift our game.
NS: One of the buzzwords of the day is "impact investing"
Do you believe that there is a new group of investors who believe in financial returns with social impact? 
MJ: I kid with people a lot on this:
we were doing impact investing before it was cool. In my mind, it’s not a new thing. I do think, though, that there are new sectors that are investment prospects … whether you look at it from a mindset of an impact investor or not. I’ll give you a couple of examples:
> First, healthcare.
This has little to with what people are calling “impact investing” and much more to do with an awakening around the health of communities – including what’s happening beyond clinics themselves.
We need to get involved in housing, jobs, healthy food, other community facilities that contribute to the reduction of stress, and so on.
I see incredible alignment between health care and what we’re doing; whether they want more social return or financial return is unclear, but this will definitely be a big area of investment going forward.
> The second example is technology.
The technology community is ripe for partnering with us. They come at it more from a standpoint of realizing that if they want to be able to attract and retain talent, they need to do something about the issues in the communities that surround them. If you look at those communities – take Boston, where housing affordability is a key issue around talent recruitment. San Francisco is also experiencing this, and we’re seeing more and more tech companies realizing that it’s in their best interest to be helpful.
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CDFI Leaders Thinking Ahead and Acting Now:

Maurice Jones

By Next Street staff 15 Feb 2018

 

 

 

Maurice Jones

President and Chief Executive Officer, Local Initiatives Support Corporation

This interview is part of Next Up: CDFI Leaders Thinking Ahead and Acting Now, an 8-part series exploring the Community Development Financial Institution industry.